Financial services regulation needs to anticipate problems rather than deal only with what has happened in the past, and see consumers as they really are, the head of the European Insurance and Occupational Pensions Authority (EIOPA) has said.

EIOPA chairman Gabriel Bernardino told a recent conference in Nice: “What we need is not more, or less, regulation, but smarter regulation.”

By smart regulation, he said he meant rules that take real consumer behaviour into account, and recognise the limitations and biases in the way people make decisions.

“We have to put the consumer as they really are at the heart of regulation, rather than the consumer regulators wish for,” he said, according to a text of the speech.

Smart regulation also means regulation that is proportionate, he said, in that it reflects the evidence of what works and what does not.

It should also be forward-looking, aiming to anticipate problems rather than address only the problems of the past, Bernardino argued.

“Our aim is to have smart regulation, not killing industry with unnecessary rules,” he said, calling on the insurance industry to continue engaging with regulators in a constructive dialogue.

Bernardino cautioned against constant shifts in regulation, saying: “Ceaseless change should not become the new normal.”

However, he also said he did not believe there had been a loss of regulatory balance.

“Among regulators, there is the general consciousness of the possibility of unintended consequences of regulation,” he said.

He said they recognised the need to stop and let new regulatory approaches settle, in order to see what then needed adjusting.